Jim Earl Aron v. Ham Management & Development Co. LLC
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2007-CA-01378-COA
JIM EARL ARON
APPELLANT/CROSSAPPELLEE
v.
HAM MANAGEMENT & DEVELOPMENT CO.
LLC
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANT:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEE/CROSSAPPELLANT
5/23/2007
HON. KENNETH M. BURNS
LAFAYETTE COUNTY CHANCERY
COURT
JAY GORE III
JOHN G. HOLADAY
CIVIL - CONTRACT
PLAINTIFF AWARDED $471,958
AFFIRMED - 6/30/2009
BEFORE LEE, P.J., GRIFFIS AND BARNES, JJ.
LEE, P.J., FOR THE COURT:
FACTS AND PROCEDURAL HISTORY
¶1.
In 1998, David Hill and David Minyard obtained title to a tract of approximately
twenty-five acres of land in Oxford, Mississippi in the division of land that they owned as
co-tenants with a third party, Kenneth Coleman. In addition to the twenty-five acres, Hill
and Minyard assumed approximately $537,000 of the debt, including $167,375 worth of
improvements on a ten-acre parcel of the twenty-five acres.
¶2.
That same year, Jim Aron became associated with Hill and Minyard. The parties
entered into an agreement where Aron would receive a one-third interest in the property. In
exchange for an interest in the property, Aron was obligated to pay Hill and Minyard
$125,000; to assume one-third of the mortgage note payments and taxes; and to complete the
development on the property in order to sell the commercial lots. Aron had difficulty paying
the $125,000, but ultimately, he paid Hill and Minyard by deeding other real estate to them.
¶3.
After Hill and Minyard conveyed a one-third interest in the property to Aron, Aron
then conveyed the one-third interest to a limited liability company, which had been renamed
as “HAM Management and Development Company” (HAM), owned by Hill, Aron, and
Minyard. Aron then began working on the property in accordance with prior plans and
specifications. John Lewis, HAM’s engineer, provided Aron with the specific work details,
including a breakdown of the different areas of construction to be completed and the cost
estimate for each area. The total construction estimate was $692,000.
¶4.
Aron began working on the property in the fall of 1998. In January 1999, Aron had
difficulty paying the construction costs and ceased working on the project. On May 19,
2003, Aron filed for personal bankruptcy. During this period, Aron was late making
payments on the note and ultimately ceased paying his share of the note after he filed suit.
¶5.
On July 30, 2004, in the Lafayette County Chancery Court, Aron filed suit against
HAM requesting an accounting of each partner’s interest in HAM and a judgment for
$261,634.39. Aron contends that the monetary amount represents the total amount of
reimbursements he is entitled to for the improvements he made on the property. HAM filed
an answer, affirmative defenses, and several counterclaims.
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¶6.
At one point, the case was removed to the U.S. Bankruptcy Court for the Northern
District of Mississippi. Ultimately, the bankruptcy judge dismissed the proceeding in favor
of adjudication of the merits in the Lafayette County Chancery Court.
¶7.
After numerous motions and pleadings were filed by both parties, the case was heard
by the chancellor in March 2007. The chancellor determined that Aron was entitled to a
judgment in the amount of $471,958. The chancellor denied all other requests for relief,
including HAM’s counterclaim.
¶8.
At some point after the chancellor’s judgment, HAM paid the $471,958 judgment to
Aron. Aron accepted the money and then perfected his appeal. In his appeal, Aron raises
the following assignments of error: (1) the chancellor incorrectly interpreted the agreement’s
intended definition of “basis”; (2) the chancellor committed prejudicial error in determining
Hill’s and Minyard’s bases; and (3) the chancellor erred in assessing his interest in HAM
without proof of damages. HAM also cross-appeals, asserting that the chancellor erred in
awarding Aron a monetary amount in excess of the amount of Aron’s investment and that
Aron is barred from appealing due to his acceptance of the judgment payment.
STANDARD OF REVIEW
¶9.
The Court will not disturb a chancellor’s findings if they are supported by substantial
evidence unless the chancellor abused his or her discretion, was manifestly wrong, clearly
erroneous, or applied an erroneous legal standard. Sanderson v. Sanderson, 824 So. 2d 623,
625-26 (¶8) (Miss. 2002). The principle of “manifest error” applies only to findings of fact.
Boggs v. Eaton, 379 So. 2d 520, 522 (Miss. 1980). However, questions of law are reviewed
de novo. Russell v. Performance Toyota, Inc., 826 So. 2d 719, 721 (¶5) (Miss. 2002).
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DISCUSSION
¶10.
We must first address one of HAM’s issues on cross-appeal – that Aron is barred from
appealing due to his acceptance of the judgment payment. Generally, a litigant who accepts
the benefits of a judgment cannot then appeal the judgment. Adams v. Carter, 92 Miss. 579,
592, 47 So. 409, 410 (1908). However, the supreme court has recognized an exception to
this rule “in cases where the amount recovered is not contested on appeal.” Taylor v. Morris,
609 So. 2d 405, 408 (Miss. 1992). In Investors Property Management, Ltd. v. Watkins, Pitts,
Hill & Associates, 511 So. 2d 1379, 1383 (Miss. 1987), the supreme court observed as
follows:
We have found several cases apparently maintaining the proposition that, when
the plaintiff accepted money paid, he may still appeal, where the object of the
appeal is simply to have a judgment modified by increasing his demand, as
where sufficient damages had not been allowed, or where proper interest had
not been allowed.
(quoting Adams, 92 Miss. at 590-91, 47 So. 2d at 410). In his appeal, Aron’s main
contention is that the monetary award was insufficient. HAM concedes that Aron was owed
$371,958 according to the agreement, but it argues that the chancellor erred in awarding
Aron an additional $100,000 as the fair value of his interest in the property. Although part
of the judgment is contested, we find it appropriate in this instance to discuss whether the
chancellor erred in determining the value of Aron’s interest in the property.
¶11.
The chancellor relied upon an appraisal submitted by Filo Coats, Aron’s expert
witness, to determine the value of the real property as of May 19, 2003. Aron filed a
voluntary petition in the bankruptcy court on that day and was effectively dissociated from
the limited liability company. See Miss. Code Ann. § 79-29-307(1)(d) (Rev. 2001); see also
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Miss. Code Ann. § 79-29-602 (Rev. 2001) (distribution upon dissociation).
Coats
determined the value of the property to be $2,760,000. Robert Church, HAM’s Certified
Public Accountant, determined Hill’s and Minyard’s bases in the property to be $1,320,244.
This amount included improvements made to the property prior to Aron’s involvement. The
chancellor found that Church’s report was the most reliable information produced
establishing Hill’s and Minyard’s bases in the property. However, the chancellor found that
Church’s accounting did not give credit for Aron’s $125,000 land conveyance to Hill and
Minyard. Thus, the chancellor reduced Hill’s and Minyard’s bases to $1,195,244.
¶12.
The chancellor calculated Aron’s basis by adding together Aron’s construction costs,
note payments to two banks, payments to Hill and Minyard, and the property transferred to
Hill and Minyard. The chancellor did not include a payment of $111,598.62 made by Aron
because Aron did not produce evidence to support this transaction. The chancellor found
Aron’s basis to be $371,948. Chris Jones, Aron’s accountant, testified that Aron’s note
payments and development expenditures totaled $264,496.40.
¶13.
After deducting the bank debt of $485,427, the chancellor determined the net value
of the property to be $2,274,573. The chancellor then deducted Aron’s basis and Hill’s and
Minyard’s bases from the net value to determine the net available amount for distribution of
$707,371. The chancellor then stated that: “If the Court were to divide the net value among
the three principals in HAM, their respective interest would be $235,790.33.”
¶14.
However, the chancellor found that Aron did not comply with the terms of his
agreement with HAM and reduced the fair value of Aron’s interest to $100,000. In the
agreement between the parties, Aron was responsible for completing all necessary acts to
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prepare the property for construction of the commercial buildings and for the eventual sale
of the property. Lewis testified that he provided Aron with the specific work details and cost
estimates. The chancellor found that Aron, after abandoning the project in January 1999, had
only completed 45% of the dirt work and 95% of the storm-drainage system. Aron failed to
perform any work on the french-drain system, the sanitary system, the water-distribution
system, or the street. The chancellor concluded that Aron only performed 24% of the total
work which he was required to perform under the terms of the agreement. The chancellor
also noted that Aron had written bad checks to Hill and Minyard, violated a city ordinance,
failed to pay a subcontractor which caused a construction lien to be placed on the property,
failed to make timely payments, and ultimately quit making payments after he filed suit.
¶15.
We find that there was substantial evidence to support the chancellor’s award of
$471,958 to Aron. We do not find any error by the chancellor in reducing Aron’s share to
$100,000 for his fair value of his interest in the property because he failed to comply with
the contract terms. Thus, we affirm the judgment of the chancellor.
¶16. THE JUDGMENT OF THE LAFAYETTE COUNTY CHANCERY COURT IS
AFFIRMED ON DIRECT AND CROSS-APPEAL. ALL COSTS OF THIS APPEAL
ARE ASSESSED EQUALLY BETWEEN THE APPELLANT/CROSS-APPELLEE
AND THE APPELLEE/CROSS-APPELLANT.
KING, C.J., MYERS, P.J., IRVING, GRIFFIS, ISHEE, ROBERTS, CARLTON
AND MAXWELL, JJ., CONCUR. BARNES, J., CONCURS IN RESULT ONLY.
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